The most common form of Power of Attorney is A Lasting Power of Attorney (LPA), which is an ongoing arrangement which allows another person to make decisions on behalf of the donor with no expiry date. An LPA however has to be registered through the Office of the Public Guardian.

The ordinary power of Attorney gives another person the authority to act on behalf of the donor for a limited period. As the donor becomes mentally impaired or loses mental capacity, the ordinary power of Attorney stands expired. It is not suitable for a Donor who wants someone to handle the affairs through the power of attorney conduit on a long-term basis and when he is not in a position to take decisions himself.

This option is only valid when a short-term or temporary decision-making proposition is involved. The donor is constrained from taking decisions and requiring someone else to make decisions for and on his behalf and for the interim. For this purpose, a specific timeframe and purpose, the Attorney can make decisions on behalf of the donor. The ordinary power of attorney is not required to be registered with the Office of the Public Guardian.

Contrary to ordinary power of attorneys, once the document is registered, a lasting power of Attorney can be used instantly when the mental capacity exists. It can also take effect when the donor loses the mental capacity, depending on when the donor wants it to be functional.
LPAs are of two types and are required to be registered with the Office of the Public Guardian, but not the ordinary power of Attorney, and these are of further of two types:

LPA for Health And Care Decisions

A lasting power of Attorney allows the Attorney to make health and care decisions and can only be used once the donor has lost mental capacity, such as:
• Medical care
• Where to live
• What to eat
• Whom to have contact with
• What kind of social activities to take part in.
• Life-saving treatment.
A health and welfare LPA comes into force if the donor loses mental capacity. Until that time, it is possible to exercise all the rights of decision making.

LPA for Financial Decisions
A lasting power of Attorney can still be used while the mental capacity has not been lost, as it could be stated that it will come into force when the donor loses cognitive ability. The property and financial affairs LPA will give the Attorney the power to:
• Paying day to day bills and expenses
• Collect pension and other benefits
• Make Investments
• Paying the mortgage
• Manage your bank accounts
• Buy, sell, or repair property

It might be beneficial for some to use the LPA if the donor needs help managing their property and financial affairs while still having mental capacity. The donor can choose when they want the power of Attorney to come into effect, either immediately or at the loss of mental capacity.

Enduring Power Of Attorney (EPA)
Enduring Power of Attorney’s was replaced by the lasting power of Attorney in October 2007 and made and signed before 1 October 2007, should still be valid. This power of Attorney covers decisions about the property and financial affairs and affects the loss of mental capacity or if it is required for someone to act on the donor’s behalf.

When is a lasting power of Attorney required?
Putting in place a lasting power of Attorney beforehand a person loses mental capacity can give peace of mind that the affairs would be under the supervision of a trustworthy person. If the power of Attorney is not set up in advance, things can get complicated especially, if organized care and support activities are required.

Those married or in a civil partnership should not assume that if the mental capacity is lost, the spouse would automatically be able to deal with a bank account or pensions and make decisions about healthcare. Without an LPA, they do not possess any authority in this situation. Hence, it is always good to set up a power of Attorney sooner. If you wait, it might be required to go through the Court of Protection to set up the Power of Attorney.

Disclaimer

Duty Of Care
It is a matter of considerable responsibility to handle someone’s affairs such as property, financial matters, and healthcare. The attorney owes a duty of care towards the donor to accurately account for all the dealings on his behalf, avoid any conflicts of interest and not benefit himself from the donor’s estate. The money and property belonging to the donor must be kept separate from the attorney’s own belongings.

Setting Up
Any person can set up his/her own power of attorney or seek professional help to handle the application. In order to give the attorney, powers to act on one’s behalf, the Lasting power of attorney has to be setup and registered with the Office of Public Guardian either by the Grantor, or the attorney by submitting following forms:
• LP1F – Lasting power of attorney for financial decisions
• LP1H – Lasting power of attorney for health and care decisions
If however the donor has lost his mental capacity, in such a case a power of attorney cannot be set up for someone, instead, the family members need to apply to the Court of Protection to be appointed as their deputies to handle related affairs.

Setting Up A Power Of Attorney
In the power of attorney forms, details of attorneys chosen and their powers to which they would act either jointly or severally must be laid down. Being able to act severally implies that each attorney can use their power independently. Conditions and restrictions can be imposed upon your attorneys’, but these may be rejected if found unworkable or unrealistic.
Attorneys can also apply for a statutory Will if the donor needs to make a Will but they cannot do it themselves. A donor’s Will once done cannot be changed. Unless the lasting power of attorney states otherwise, attorneys can spend money on:
• gifts to a donor’s friend, family member or acquaintance on occasions when they would normally give gifts (such as birthdays or anniversaries)
• donations to a charity that the donor would not object to, for example a charity he has donated to before

Attorneys must apply to the Court of Protection for any other type of gift or donation, even if the donor has given them before. These include:
• paying someone’s school or university fees
• letting someone live in the donor’s property without paying market rent (anything they pay below market rent counts as a gift)
• interest-free loans
Attorneys must also check that the donor can afford the gift or donation, even if they have spent money on these types of things before. For example, attorneys cannot donate their money if that would mean they couldn’t afford their care costs. Buying and selling property is possible however attorneys need to get legal advice if the sale is below the market value, want to buy the property yourself or giving the property to someone else.

If the donor shares a property with single attorney on loss of mental capacity, the attorney will need to choose a “Trustee” before the property could be sold. Attorneys can be ordered to repay the donor’s money if they have misused it or made decisions that benefit the attorney.

Signing & Attestation
The forms must be signed by the donor, the certificate provider, doctor who attested the mental capacity, each of the attorneys and the witnesses before submission.

Forms
After the power of attorney forms are signed, they are required to be submitted to the Office of the Public Guardian along with the fee. A Government’s online service can be used to create a LPA or by filling in a paper form sent by post to the Office of the Public Guardian. It can take 8 to 10 weeks to register the power of attorney.

Notifications
Though not required to name anybody, if there are people who need to know that the donor is registering them as a power of attorney they should need to be identified and indicated in the LPA. A form LP3 should be send to them for notification and three weeks-time to show their concerns, if any with the Office of the Public Guardian.

Registration
Once the Office of the Public Guardian is satisfied with the particulars, they will send a stamped copy of the Power of attorney, showing that the Office of the Public Guardian has accepted the application and the lasting power of attorney has since been registered. An LPA is invalid and can’t be used until signed by the Office of the Public Guardian. It can also be chosen to whom the registered power of attorney is to be returned.

Power Of Attorney Fee
In England and Wales the fee per power of attorney is £82 for a single LPA and £164 for registration of both lasting power of attorney for property decisions and lasting power of attorney for health and care because separate forms need to be submitted.
People can also qualify for exemption if they are aided by certain benefits, like Income Support, and other state benefits or if the income is less than £12,000, a 50% discount on the fees can also be claimed.
Some people prefer to seek a professional’s assistance to complete the process which on one side reduces the mistakes and possibility of the application being rejected, but on the other hand, can considerably be costlier.

Certified Copies
Multiple certified copies of the power of attorney may be required to be used with banks and other institutions. These certified copies are generally accepted by banks and other financial institutions and also eliminate the risk `of the original documents getting lost.
A normal copy is useless unless it is countersigned by the donor while they still have mental capacity. And the donor must write at the bottom of each page that it is a true and complete copy in correspondence with the original document, which many may find difficult to comply with.
Donor’s Bank?
Most attorneys for a lasting power of attorney on property decisions, will have to deal with the donor’s bank. Before you can manage the donor’s account, you must show the bank the original registered lasting power of attorney and proof of your name, address and the donor’s name or address if they’re not the same as on the bank account. To register with the donor’s bank as an attorney, the bank will also ask for the following:
• Original lasting power of attorney document, or a certified copy signed by a solicitor
• Each attorney’s address (a recent utility bill as proof)
• Proof of each attorney’s identity (their national identity card or passport)
If there are joint attorneys, each one can normally have the copies of necessary documents to provide to the bank. If registration is done by post, the requisite details and supporting documents need to be sent.

Declaration
Acting as someone’s attorney with the bank may require declaring the mental capacity of the donor. This would raise the question as to whether the donor has still had mental capacity, or whether he/she is mentally impaired. In the latter case, it would be attorney himself generally, who will take over completely.

Although no medical evidence is required this time, the attorney must state the donor’s condition accurately. If the donor is declared mentally impaired, they have no control over their financial assets and will no longer be able to issue cheques and withdraw money, etc. If they have the capacity, but they may still require that the attorney acts on their behalf due to any reason. They can also continue to operate their bank account as usual.

Payments
Most banks give attorneys online access to the donor’s account and allow them to sign cheques and give instructions in a branch. But this may not be the case if the donor still has capacity. Bank statements are generally sent to the attorneys where requested.
Some banks permit attorneys to sign the cheques which bear the donor’s name, while some banks issue cheque books with the attorney’s name printed along with the donor’s.

Accounts Or Credit Cards
Applying for a new Individual Savings Account in the name of a donor is usually allowed by most banks but borrowing is discouraged. In the same way, banks usually don’t issue credit cards to attorneys; overdraft facility is also restricted. Having a power of attorney on the donor’s account doesn’t exempt them to claim tax-free interest or the best rates.

Care Accountancy can help in setting up a power of attorney if it forms part of your plans. It is in fact worth putting one in place beforehand.
Care Accountancy can help and provide optimum solutions for your requirements if you want to put up power of attorney for yourself based on a review of your individual circumstances. We will consider all available options and suggest expert advice accordingly to suit your individual needs.
Please contact us to have a detailed conversation and to find out how we can assist you.